Yenidunya Investments, Ltd. v. Magnum Seeds, Inc.

FILED
NOT FOR PUBLICATION MAR 13 2014
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
YENIDUNYA INVESTMENTS, LTD., a No. 12-15037
Cyprus, EU corporation,
D.C. No. 2:11-cv-01787-WBS-
Plaintiff - Appellant, CKD
v.
MEMORANDUM*
MAGNUM SEEDS, INC., a California
corporation and GENICA RESEARCH
CORPORATION, a Nevada corporation,
Defendants - Appellees.
YENIDUNYA INVESTMENTS, LTD., a No. 12-15413
Cyprus, EU corporation,
D.C. No. 2:11-cv-01787-WBS-
Plaintiff - Appellant, CKD
v.
MAGNUM SEEDS, INC., a California
corporation and GENICA RESEARCH
CORPORATION, a Nevada corporation,
Defendants - Appellees.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Appeal from the United States District Court
for the Eastern District of California
William B. Shubb, Senior District Judge, Presiding
Argued and Submitted February 11, 2014
San Francisco, California
Before: CALLAHAN and M. SMITH, Circuit Judges, and HELLERSTEIN, Senior
District Judge.***
Yenidunya Investments, Ltd. (“Yenidunya”) appeals from the district court’s
orders dismissing on statute of limitations grounds its declaratory judgment action
against Magnum Seeds, Inc. (“Magnum”) and Genica Research Corporation
(collectively, the “Defendants”) and awarding attorney’s fees. We have
jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.
I
According to Yenidunya’s complaint, the Defendants invoked a contractual
“drag-along” provision transferring its shares in Magnum “on or about” March 7,
2005, and refused to recognize Yenidunya as a Magnum shareholder beginning “on
or about” that same date. Yenidunya did not file suit until over six years later, on
July 6, 2011. Under California law, a cause of action based on a corporation’s
failure to recognize a shareholder’s status accrues when the shareholder has
***
The Honorable Alvin K. Hellerstein, Senior District Judge for the U.S.
District Court for the Southern District of New York, sitting by designation.
2
knowledge that the corporation has denied the shareholder’s rights to attend
meetings, vote, share in dividends, or otherwise participate in its affairs. See
Maguire v. Hibernia Savs. & Loan Soc’y, 146 P.2d 673, 681 (Cal. 1944);
Schneider v. Union Oil Co., 6 Cal. App. 3d 987, 993-94 (1970). At most, the
applicable statute of limitations period was four years. See Cal. Civ. Proc. Code §
343 (specifying the limitations period for actions not otherwise specified).
Yenidunya contends that its continued possession of the stock certificate
precluded the statute of limitations from running because formal delivery and
endorsement were necessary to transfer its interest. It is undisputed that
Yenidunya knew, as of March 7, 2005, that the Defendants considered Yenidunya
bound by a contractual obligation transferring its shares. Thereafter, the
Defendants refused to recognize Yenidunya’s status and enjoyed the full use of the
disputed shares. Yenidunya could not simply hold its stock certificate forever, in a
naïve belief that the statute of limitations never would run. Accordingly, it was
incumbent upon Yenidunya, as the allegedly injured party, to bring suit within the
statutory period, and because it failed to do so, the district court correctly
dismissed its action.1
1
As Yenidunya failed to bring any action within the statutory period, we
need not decide whether the agreements at issue here were valid.
3
II
Under California law, contractual attorney’s fees provisions are enforceable
to allow either party to recover reasonable attorney’s fees. See Cal. Civ. Code §
1717(a); Roy Allan Slurry Seal v. Laborers Int’l Union, 241 F.3d 1142, 1145 n.3
(9th Cir. 2001). Applying these principles, the California courts have awarded
“attorney fees to the party who successfully thwarts the other party’s efforts to
have a contract declared void at its inception,” where the challenged contract
contains an attorney’s fees provision. Eden Twp. Healthcare Dist. v. Eden Med.
Ctr., 220 Cal. App. 4th 418, 430 (2013). Here, the district court correctly found
that the Defendants were entitled to recover attorney’s fees under the contract
signed by Yenidunya’s predecessor because Yenidunya could have recovered
attorney’s fees under the disputed contracts if it had prevailed.
AFFIRMED.
4